speculative distribution funding …docs.novaloca.com/31527_633590763698171428.pdf · junction 28...

SpecPhase 3

ulative Distribution Funding Opportunity , Building D, Gateway 28, Junction 28, 1

M

A 28,799 m2 (310,000 ft2 distribution warehouse)

Comprising the third phase of the successful 740,000 ft2 Gateway 28 scheme

Accessed from the A38 (T) 2.5 miles east of J28

Anticipated rental £1,472,500 per annum (£4.75 ft2)

Capital commitment £22,204,147

Initial yield – 6.5% assuming a 2 year rental guarantee

John Proctor [email protected]

PHASE 3, BUILDING D GATEWAY 28 JUNCTION 28 M1 SPECULATIVE DISTRIBUTION FUNDING OPPORTUNITY

Speculative Distribution Funding Opportunity Phase 3, Building D, Gateway 28, Junction 28, M1

Contents 1. Background Page 1 2. Location Page 1 3. Gateway 4. The Property Page 2 5. Floor Areas Page 3 6. Planning Page 3 7. Tenure Page 3 8. VAT Page 3 9. Capital Allowances Page 3 10. Warranties Page 4 11. Junction 28 as a Distribution Location Page 4 12. Timing Page 6 13. Financial Proposal Page 6 14. Marketing Agreement & Acceptable Lease Terms Page 8

15. Further Information Page 8 16. Contact Page 8 17. Misrepresentation Clause Page 9 Appendix 1 - Location Plan Appendix 2 - Site Plan Appendix 3 - Elevations

JMP/KSK 15 February 2007


Page 1

1. Background Wilson Bowden Developments Limited are developing Gateway 28 a 35 acre Distribution Park at Junction 28 of the M1 on a phased basis. They have successfully sold phases 1 and 2 of the scheme which comprised two units totaling 100,000 ft2 developed on a speculative basis and a site of some 12 acres on which Quinn Plastics Ltd are to build a 260,000 ft2 distribution depot. As a consequence they are now moving forward to develop phases 3 and 4 of the scheme. Wilson Bowden will develop phase 4 themselves on a speculative basis and this is likely to comprise a two terrace scheme of light industrial/warehouse units totaling approximately 65,000 ft2. Phase 3 comprises a 28,799 m2 (310,000 ft2) distribution unit set within a site of 13.26 acres and WBD are seeking a funding partner to speculatively develop this new distribution warehouse.

2. Location Gateway 28 is accessed from the A38 (T) approximately 2.5 miles East of Junction 28 of the M1 within a recognised distribution location. The Junction 28 distribution corridor stretches from Alfreton in the South-West to Mansfield in the North-East providing the largest and most established distribution location within the Northern M1 corridor within the East Midlands. More detailed commentary on the evolution and onward growth of Junction 28 is provided with the accessibility of the location demonstrated by the following destination and drive time table:

Destination Miles Time

Nottingham 18 23 minutes

Birmingham 65 1 hour 10 minutes

Sheffield 34 41 minutes

Manchester 60 1 hour 29 minutes

Leeds 61 1 hour 3 minutes

London 142 2 hours 51 minutes



Page 2

Historically the location was at the heart of the North Derbyshire and Nottinghamshire Coalfields and as a consequence there is a diverse immediately accessible labour pool which is available at lower than the average UK labour rates. The attached plans, aerial photographs and elevations confirm the sites accessibility and prominence. 3. The Property The computer generated image, elevations, floor plans and site plans are attached. A copy of the developers proposed specification is available upon request. Upon completion it will provide a new high bay distribution warehouse with features of the proposed specification including: ♦ 12m minimum internal height to eaves ♦ FM2 flatness power floated concrete floor within the warehouse ♦ Floor loading 50 Kn m2 ♦ 22 tailgate accessed doors with dock levellers ♦ 3 level access doors ♦ 2 storey projecting front external office block incorporating welfare facilities and WC’s ♦ Concrete surfaced 47m deep service yard ♦ Gatehouse controlled entrance ♦ 157 car parking spaces ♦ 17 individual lorry spaces

4. Floor Areas The anticipated gross internal floor areas are: Accommodation Sq m2 Sq ft2

Warehouse 27,870 m² 300,000 ft²

Ground Floor Offices 464.5 m² 5,000 ft²

First Floor Offices 464.5 m² 5,000 ft²

Total 28,803 m² 310,000 ft² The gross internal floor area will be measured upon completion and will be subject to agreement – there may as a consequence be some adjustment to the figures adopted for the purposes of preparing the initial financial proposal.



Page 3

5. Planning A detailed Planning Application is shortly being submitted to Ashfield District Council. Ashfield are supportive of the proposal with the site having the benefit of an outline planning consent for B1/B2/B8 use.

6. Tenure The site is freehold. 7. VAT VAT will apply at standard rate.

8. Capital Allowances The full unexploited benefit of Capital Allowances will be conveyed with the property.

9. Warranties Warranties will be provided from the Professional Team and principal subcontractors with design responsibilities – they will include: ♦ Architects - Maber Associates ♦ Structural Engineer – BWB Partnership ♦ Contractor – Wilson Bowden

10. Junction 28 as a Distribution Location Junction 28 is the most strategic distribution location on the M1 within the Northern East Midlands area with the estates running from Alfreton in the South-West to the Western outskirts of Mansfield in the North East. Junction 28 provides the intersection of the M1 and the A38 (T) with the A38 providing linkage from Mansfield, through Birmingham and onwardly to the South-West. The central location of Junction 28, the good road network and availability of labour have been the principal reasons as to why the location has flourished.



Page 4

Traditionally the evolution and development of this area was based upon the traditional industries of mining, textiles, hosiery and engineering with the towns and communities within the area having a traditional linkage particularly with the mining industry. The demise of these industries has led to the individual characteristics of the smaller towns changing but the traditional industries led to large natural land allocations for employment use. The change in profile of the traditional industries, the availability of land and the availability of a large labour base meant that the area has had to refocus and re-educate and as a consequence Junction 28 has grown as a distribution location.

Significant regional distribution centres are currently occupied by major occupiers who include Unichem UDG, Johnson Diversey, Synseal and Kuhne Nagel by way of illustration. The most active developers within the area have recently been Sladen Estates and Wilson Bowden Developments both of whom have ongoing schemes within the area. Significant strategic schemes are being evolved by Astral at Hamilton Park in Mansfield (approximately 100 acres) and Wilson Bowden Developments at Castlewood where planning permission has now been received for their 112 acre distribution and Business Park. At the time of reporting there is no comparable development currently on site at Junction 28 albeit Quinn Plastics are shortly to commence the development of their 260,000 ft2

distribution depot on phase 3 of Gateway with the most recent comparable development being that of Point 28 undertaken by Sladen Estates where they speculatively developed 174,000 ft2 with British Aerospace. Point 28 was let shortly after completion to Clearway Distribution Ltd on the basis of a 20 year lease at a rental of £4.75 ft2.

Otherwise speculative development has been undertaken in unit sizes up to 110,000 ft2. The largest unit of 110,000 ft2 has been developed by TFD Midlands. This unit completed in the Autumn of 2006 – and remains available being marketed at an asking rental of £4.75 ft2. Sladen Estates have developed a three unit scheme at the Nursery adjacent to Junction 28 where the largest unit is some 54,000 ft2 having recently also sold a 57,000 ft2 unit at Station Park in Kirkby In Ashfield together with a 90,000 square foot building for Homecare on Nunnbook Road.



Page 5

At Brook Park in Shirebrook (accessed from Junction 29 of the M1) Sports Soccer have developed their UK distribution centre where the first phase extends to approximately 600,000 ft2. Also at Junction 29 Henry Boot Developments are evolving their 200 acre redevelopment of Markham Vale which is to include the provision of a new motorway junction – Junction 29A and we understand infrastructure works are due to commence in the summer of this year. Further North at Junction 31 of the M1 Gladman Developments speculatively developed 500,000 ft2 at Barlborough Links which was pre-let to Tesco. Junction 31 also serves Worksop where it is understood that a unit of some 330,000 ft2 is being pre-funded on a speculative basis off a base rental of £4.50 per ft2 which continues to strengthen Worksop as a distribution location with the town already being the home of the Wilkinsons DIY UK Distribution Centre of 900,000 ft2 and the B & Q Distribution Depot of 875,000 ft2. This financial proposal adopts the base rental of £4.75 per ft2 which compares favourably with the tone of rentals and asking rentals which currently exist on the M1 corridor which can be summarized as follows: Scheme Location Size of Unit Asking rent per ft2

East Midlands Distribution Centre

J24A M1 270,000 1,000,000 ft2

£5.00

Access 26 J26 M1 260,000 ft2 £4.85

The Big Locker J28 M1 110,000 ft2 £4.95

G Park Worksop 330,000 ft2 £4.50

G Park Sheffield 412,000 ft2 £4.75 11. Timing WBD are aiming to commence on site in the summer of 2007 with the anticipated build period being 10 months. A development programme is available upon request. 12. Financial Proposal It is proposed the funding partner purchases the land at the outset and enters into a Development Agreement with Wilson Bowden Developments to develop the property in accordance with the agreed plans and specifications.



Page 6

Interest is invited based upon a maximum capital commitment of:

£22,204,147 (Twenty Two Million, Two Hundred and Four Thousand, One Hundred and Forty

Seven Pounds)

This figure has been prepared by assuming that upon completion Wilson Bowden Developments will provide a two year rental guarantee at an annual rental of:

£1,472,500 per annum (One Million, Four Hundred and Seventy Two Thousand, Five Hundred Pounds)

ie. £4.75 per square foot

The capital commitment has been derived by adopting a net initial yield of 6.5% and applying purchasers costs of 5.7625% to the initial land purchase figure and 1.7625% to the residual payments. The breakdown of the payments is as follows: Initial land purchase The site will be conveyed to the fund at the outset for the sum of:

£3,978,000 (Three Million, Nine Hundred and Seventy Eight Thousand Pounds)

A purchase price at this level reflects:

£300,000 per acre

(Three Hundred Thousand Pounds)

Construction Payments The fund will be invited to issue stage payments throughout the duration of the construction period which can be paid by certification on a monthly basis or alternatively on a fixed payment profile basis. A financial appraisal and cash flow is available upon request. Balancing Payment 10 days following the Certification of Practical Completion of the development the funding partner will pay the initial balancing payment which will represent:



Page 7

The maximum capital commitment less: ♦ The initial land payment ♦ Interest accruing on the land acquisition price and the interim payments made for the

duration of the construction period at an equivalent rate of 6% per annum ♦ A retention equal to 1.5% of the building contract value which will be withheld over a

12 month defects liability period

Final Payment At the end of the 12 month defects liability period Maber Associates will co-ordinate a final inspection and issue a Final Completion Statement at which time the Final Payment releasing the retention will be made. 14. Marketing Agreement and Acceptable Lease Terms It is proposed that the property will be marketed by Fisher Hargreaves Proctor together with any joint agents appointed by the Fund. It is proposed that the agents invite interest in a 10 year term but that they should have the flexibility to be able to agree to a 5 year break clause. 15. Further Information Supplementary information is available for interested parties which includes: ♦ Plans in digital and hard copy formats ♦ The proposed development specification ♦ Environmental and Ground Condition Reports ♦ Financial appraisal and cash flows 16. Contact More detailed information is available by contacting John Proctor at the Selling Agents: Fisher Hargreaves Proctor 10 Oxford Street Nottingham NG1 5BG DD: 0115 841 1130 Mobile: 07887 787 880 Email: [email protected]


mailto:[email protected]


Page 8

17. Misrepresentation Clause Fisher Hargreaves Proctor themselves act for the Vendors of the property who’s Agents they are give notice that: Particulars are set out as a general outline only for the guidance of intending purchasers and do not constitute, nor constitute part of, an offer or contract; All descriptions, dimensions, references to conditions and necessary permissions for use and occupation and their details are given in good faith and are believed to be correct but any intending purchaser should not rely on them as statements or representations of fact but must satisfy themselves by inspection or otherwise as to the correctness of each of them; No person in the employment of Fisher Hargreaves Proctor has any authority to make or give any representations or warranty whatever in relation to these properties or their particulars nor enter into any contract relating to the property on behalf of Fisher Hargreaves Proctor nor any contract on behalf of the Vendors; No responsibility can be accepted for any expenses incurred by intending purchasers in inspecting properties or undertaking due diligence. Fisher Hargreaves Proctor have not made any investigations into the existence or otherwise of any issues concerning pollution and potential land, air or water contamination. The purchaser is responsible for making their own enquiries in this regard.



Page 9

Appendix 1

Location Plan



Page 10



Page 11

Appendix 2

Site Plan



Page 12 JMP/KSK 15 February 2007


Page 13

Appendix 3

Elevations



Page 14


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